American taxi-booking firm pulls out after sinking at least $2 billion in two years.

Share this story

Uber is not totally bulletproof, it turns out. After two years and billions of dollars, the firm has admitted defeat in China and agreed to sell all its Chinese assets and infrastructure to its monolithic rival Didi Chuxing.

Further Reading

According to Bloomberg, Didi—by far the largest Chinese ride-booking firm—will take over "Uber's brand, business, and data in the country."

The multibillion-dollar deal will see the American-based Uber own 5.89 percent of the combined company, and preferred equity interest worth 17.7 percent of the economic benefits. The new business is now worth $35 billion (£26 billion)—£5 billion (£3.8 billion) more than Didi's $28 billion (£21 billion) valuation in June.

Didi Chuxing, which is headquartered in Beijing, claims to have 87 percent of the Chinese market share, providing in the region of 14 million journeys a day in more than 400 cities. It was formed in 2015 by a merger of the two dominant Chinese taxi firms Didi Dache and Kuaidi Dache, and backed by two of the country's Internet giants: Tencent Holdings and Alibaba Group. Apple meanwhile invested $1 billion into the firm in May. In the end, Didi Chuxing simply outmuscled Uber, which moved into China in 2014 and failed to make any profit.

“As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart,” Uber CEO Travis Kalanick wrote in a blog post obtained by Bloomberg. “I have no doubt that Uber China and Didi Chuxing will be stronger together.”

Further Reading

Uber is believed to have sunk at least $2 billion into its Chinese misadventure, a considerable portion of which was spent on aggressive subsidies. Analysts believe that Uber pulled out under pressure from investors afraid of the impact further losses could have on the firm's eventual IPO. Despite this, the Chinese market is so huge that Uber's top ten cities by volume were all Chinese.

“Uber and Didi Chuxing are investing billions of dollars in China, and both companies have yet to turn a profit there,” Kalanick, whose firm is nevertheless valued at a hearty $62.5 billion (£47.4 billion) wrote. “Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term.”